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Hi Tech Boom Goes Bust as Layoffs Hit Silicon Valley

by Adam Price |
July 1, 2001
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San Jose, CA - Silicon Valley's boom is going bust. Hi-tech corporations that were once the darlings of Wall Street, such as Cisco, Hewlett Packard, and Juniper Networks are laying off thousands of workers. The unemployment rate here in Santa Clara County has doubled since the beginning of the year.

While many of the workers losing jobs in Silicon Valley and San Francisco are professionals and white-collar workers, nationwide less-skilled workers have seen their unemployment rate climb three times faster than the rate for all workers. African-Americans have always been among the "last hired, first fired." This recession is no different, with the unemployment rate for Blacks, already twice that of whites, growing the fastest of all nationalities.

On Wall Street, many are blaming the chairman of the Federal Reserve Bank, Alan Greenspan, for falling stock prices and the poor state of the economy. But the current economic slowdown is typical of recessions in a capitalist economy, where businesses cut back on investing in new plants and equipment, and banks cut back on lending. Manufacturing jobs are the first to go, as companies and households delay purchases of machinery, cars, and appliances.

What is different about the U.S. economy today is that many more families are up to their necks in debt. Over the last ten years, banks, credit card companies, car finance companies, and mortgage lenders have pushed billions of dollars in loans to individuals in order to profit from interest and fees. Many workers whose wages have not kept up with rising prices have gone into debt to maintain their standard of living. The high level of debt and growing unemployment are causing more and more borrowers to fall behind on their loan payments. Even a short time without a job will force these households to cut back on their spending, pushing the economy further into recession.

Rather than providing working people with real help, the politicians are using the economic slowdown to help the rich and big business. President Bush claims that his tax cut will get the economy going again. What he doesn't say is that 40% of the tax breaks will go to the richest 1% of the population, while most low-income and poor people will get little or no aid. Bush and Congress are also helping out banks and credit card companies by making it harder for people to declare bankruptcy. And even as our political leaders scramble to help the rich and big corporations, poor people are faced with cuts in welfare as time limits kick in.

Already there are some politicians who are blaming immigrants for our economic problems. But the reality is that our jobs are being taken from us by capitalists trying to boost their profits by cutting labor and making the rest of us work harder. We need to unite to fight for our jobs, and make sure that needed services for poor and oppressed nationality communities aren't cut.